Acc107 Financial Accounting: Week 5 Assignment - Receivables Worksheet

Acc107 Financial Accounting: Week 5 Assignment
Receivables Worksheet

Part 1. Pandot Inc.
On August 25, Maria Gomez purchases $12,500 in products from Pandot Inc. on credit. The terms of the sale are 5/20, net 45. On September 7, Ms. Gomez returns $2,500 of product to Pandot. On September 9, she pays her bill in full.

Prepare the journal entries required to record the sale of merchandise, the return of merchandise, and the collection of the accounts receivable. Enter your answers in the shaded areas of the journal below.

Part 2. Moray Snax Inc.
Moray Snax Inc. sold 500 pounds of eel food to the District Aquarium on credit on February 7 for $6,000. The terms of the sale were 2/10, net 30. The District Aquarium pays the bill in full on February 21.

a. Prepare the entries to record the sale and the receipt of payment.
b. Why didn’t the Aquarium receive a discount?

Part 3. Blizzard Company’s Bad Debt Expense
On December 31, the Blizzard Company has a receivables balance of $55,000. Blizzard accountants have estimated that 5% of this balance will be uncollectible. Prior to any year-end adjustments, the balance in the allowance account is a $1000 debit.

a. Prepare the journal entry to record bad debt expense for the year and show the calculation for bad debt expense in T-Account form. Enter your answers in the shaded areas of the journal and T-account below.
b. On January 17, the Blizzard Company determines that an account receivable of $500 is uncollectible. Prepare the necessary journal entries to write it off the books. Hint: The company will write off the receivable and reduce the balance in the allowance account that was created when the bad debt expense was entered.

Part 4. Calculate Interest on Notes Receivable
Read each of the following scenarios.
1. On 10/1, Company A accepts a $15,000, 5%, 6-month note receivable.
2. On 4/1, Company B accepts a $30,000, 10%, 3-month note receivable.
3. On 3/15, Company C accepts a $25,000, 7%, 6-month note receivable.

Assuming a December 31 year end, calculate the current-year interest revenue for each of the scenarios. Hint: Remember, Interest = Principal x Annual Rate of Interest x Time Outstanding.Enter your answers in the shaded areas below.

Part 5. Record Notes Receivable
Dolce Company has a fiscal year end of December 31. On March 1, Dolce accepts $10,000 cash and a six-month, 5%, $40,000 note receivable from Flicker, Inc. for services provided. Flicker paid the principal and interest at maturity.

a. Prepare all journal entries from the acceptance of the note to the maturity date. Enter your answers in the shaded areas below. A couple of account names have been filled in for you.
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